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You are one of the world’s largest energy companies, you face a binding shareholder vote on your chief executive’s pay, and you seem to recall that – last year – 60 per cent of investors opposed his proposed 20 per cent pay rise.

Do you:

a) Propose another 20 per cent increase – he’s such a great guy!

b) Lower the targets for his long-term incentive plan in a way that shareholders cannot fathom;

c) Cut his maximum possible payout by £3.7m to avert a fresh rebellion by investors.

Later this morning, BP shareholders will find out what the oil major has decided about Bob Dudley’s package. And, if reports from Sky News’s Mark Kleinman are anything to go by – and they generally are – the company will adopt option c).

BP is set to cut chief executive Bob Dudley’s maximum pay by up to $3.7m over the next three years to avoid a repeat of last year shareholder revolt. Back then, almost three fifths of voters rejected a rise in his pay to $20m for 2015 — a year in which he led the group to its worst ever loss.

Under the terms of the new pay package, Mr Dudley’s maximum award under his LTIP is expected to fall from seven times his basic salary, currently $1.85m, to five times. This would take his maximum pay package, excluding pension contributions, from $19m to $15.3m. BP is also expected to cut the proportion of Mr Dudley’s bonus earned for meeting performance criteria.

This year, BP and its rival Shell are among the UK companies that face binding votes on their remuneration policy. If shareholders vote policies down, companies will have to rethink schemes and reapply for approval.


You are one of the world’s largest consumer goods companies, you have just seen off an aggressive takeover bid from the US maker of orange plastic cheese, and you don’t want shareholders tempted by another offer.

Do you:

a) Suggest the government might want to change the takeover rules to stop such beastliness;

b) Forget your long-termist principles, and leverage up with debt to fund short-term shareholder payouts;

c) Announce a wide-ranging review to boost growth and margins.

Earlier this morning , Unilever shareholders found out that it is now pretty much planning all three. Having hinted at a) and b) after a failed takeover approach from Kraft Heinz, the company has announced the outcome of c), its review.

And surprise, surprise, it concludes what’s needed is:

  • “a proven long-term model of compounding growth and sustainable value creation”
  • a 20 per cent underlying operating margin, before restructuring,
  • a restructuring of its foods and refreshment divisions into into one organisation (unlocking future growth and faster margin progression, of course)
  • an exit from its Spreads business
  • a net debt / EBITDA target of 2 times
  • a share buy-back of €5bn
  • a 12 per cent hike in the dividend

Chief executive Paul Polman said:

Oi, you greedy disloyal short-term shareholder mercenaries, is this enough to buy your support for a few more months…?!!!

No he didn’t. He actually said:

Our recent review concluded once more that our strategy for long-term value creation through growth and compounding returns on investment is the right one for Unilever and for our shareholders. It also highlighted the opportunity to go faster and further…. This acceleration allows us to unlock sustainable value faster and target an overall underlying operating margin, which excludes restructuring, of 20% by 2020.

Meanwhile, Mothercareshareholders are already being rewarded for their loyalty. In January, the struggling babywear retailer returned to sales growth in the UK, reporting that like-for-like sales ticked up 1 per cent in the previous quarter — thanks to online sales growth of 5.5 per cent.

This morning, the news was better. In the 11 weeks to March 25, UK like-for-like sales were up 4.5 per cent, driven by online sales growth of 13.6 per cent.

Online sales now represent £4 in every £10 the company takes in the UK. Some international markets are now also growing, although the Middle East remains “challenging”. As a result international retail sales were down 1.7 per cent in constant currency but up 15.4 per cent in actual currency. Ten new websites were opened during the year.

And, finally, Co-op has revealed the price of reverting to its 1970s curly white logo and repainting all its green shops blue: these, and other aspects of its revamp meant it slipped to a pre-tax loss last year.

Revenues were up 3 per cent, including a 3.5 per cent rise in like-for-like food sales. Operating profits grew by an impressive 32 per cent.

But costs relating to its ‘Rebuild’ programme, changes in the value of the company’s bonds, and a very cautious zero valuation on its holdings in the Co-Operative Bank (which is seeking a buyer) led to a statutory loss of £132m, compared with a profit of £23m in 2015.

FT Opening Quote, with commentary by Matthew Vincent, is your early Square Mile briefing.

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